Macomb business owners' suit against IRS thrown out

A federal judge has dismissed a lawsuit filed by two Macomb County businesses against the Internal Revenue Service over civil forfeiture policies.

U.S. District Court Judge Terrence G. Berg on Wednesday ruled that since the IRS had paid back cash seized from Schott’s Supermarket in Fraser and Metro Marathon gas station in Sterling Heights, there was no issue to be decided.

“Plaintiffs have failed to establish the issues in the present lawsuit amount to a ‘substantial controversy between the parties,’” the judge wrote in his ruling.

The owners of the two businesses sued the IRS and Barbara McQuade, the U.S. Attorney for the Eastern District of Michigan, in an attempt to change forfeiture procedures after the feds seized thousands of dollars from the two.

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IRS agents had accused the companies of “structuring” bank deposits to avoid federal anti-money laundering laws that call for banks to notify the IRS of any deposits of $10,000 or more.

Agents seized more than $100,000 in total from the two without warning and no criminal charges were filed against Terry Dehko and his daughter Sandy Thomas, who run Schott’s Supermarket, or gas station owner Mark Zaniewski.

The companies countered by saying they were only insured for $10,000 and made timely deposits to have low cash amounts in their registers in the event their stores were robbed.

Owners of the two companies were represented by the Arlington, Va.-based Institute for Justice, a public interest law firm. In late 2013, the IRS dismissed the structuring allegations and refunded the money to the companies.

They then filed suit, asking a judge to order the IRS to make sure a prompt court hearing is held when property is seized through civil forfeitures. They also sought a declaratory judgement making it legal for legitimate companies to make deposits of less than $10,000 without having to notify the federal government.

In his ruling, the judge said the IRS voluntarily dismissed the forfeiture complaints and if the companies had wanted a ruling in their favor, they should have proceeded to trial instead of agreeing to the dismissal.

Larry Salzman, an attorney with the Institute for Justice, said the companies will file an appeal. In a news release, the Institute called the ruling a “minor setback in the long-term battle.”

“It’s unfortunate because we feel the court missed an opportunity for the judge to oversee what the IRS is doing with these civil forfeitures,” Salzman said.

Since the seizures occurred, owners of both Schott’s Supermarket and Metro Marathon have had to incur more expenses to make sure they don’t face the same situation in the future.

“This really has put them in fear and made them change the way they do business,” Salzman said. “Schott’s has a an armored car pick up their money. Mark (Zaniewski) has changed his schedule, he’s working nights and weekends more and going to the bank more frequently to make deposits.”